What is Going On With This Economy?

The Weekly Recap

Mortgage demand is slowing across the US, Morgan Stanley’s Chief US Economist says The Fed is done raising rates for now, the US is approaching another government showdown over a potential shutdown, New York is becoming a hotbed for tech startups, Gamestop has a new CEO, speaking of CEO’s, Delta’s came out and said that they may have went overboard with restructuring their Delta Skymiles program and Travis Kelce (Taylor Swift’s boyfriend for non-football fans) is getting the T-Swift effect with his jersey sales up over 400% since Tay-Tay was seen at the Chiefs game last weekend rooting him on.

What Is Going On With this Economy?

My feelings on avoiding a recession and continued inflation for the economy is similar to Michael Corleone when he bemoaned in the Godfather (part III) “Just when I thought I was out, they pull me back in!” Just when we think we are going to achieve that ‘soft landing’ the Fed has been hoping for, we get pulled back into fears of stagflation and an economy that wont slow down. With unemployment still near historic lows and inflation off its global highs, there are some that continue to be anxious about the economy for fair reasons.

A good indicator of future economic performance is the current state of the bond markets. The remarkable moves this month by the bond market imply a stronger economic growth path ahead. Interest rates rising has been driven by higher real yields, meaning the bond market is not pricing in higher inflation but an economy that is persistently running hot.

The indication of ‘long rates’ like those reflected in the bond market heavily influence business decisions and according to Austin Goolsbee, Chicago Fed President, may lead to conversation about continuing to tighten monetary policy a.k.a continuing to raise rates.

Economic data the last couple of months has been solid and pretty consistent with forecasts. Nothing has shown to be a radical rethinking in the medium-term outlook but it diminishes hope that the 2% CPI number can be achieved before 2025. The Fed’s ‘higher for longer’ interest rate forecast has brought some pause with most as consumer confidence is waning. Even though overall inflation has been slowing, most consumers are still dealing with elevated energy and food prices while the credit card debt in the US just topped $1 Trillion.

Market Performance

Here are how some other indexes and asset classes have performed as of this mornings opening bell.

NYC Market Update

Here is a view of new inventory that has come onto the NYC market over the past week as well as newly signed contracts in Manhattan which has seen a big increase.

Mortgage Rate Update

The 30-year fixed-rate mortgage has hit the highest level since the year 2000. However, unlike the turn of the millennium, house prices today are rising alongside mortgage rates, primarily due to low inventory. These headwinds are causing both buyers and sellers to hold out for better circumstances, which from the buy side I’ve been adamant about the loss in value of waiting.

News You Can Use

• Morgan Stanley’s Ellen Zentner Says Fed is Done Raising Rates for Now Bloomberg

• New York is a Tech Startup Hotbed CNBC

• Why the Federal Reserve Hasn’t Spooked the Stock Market Yahoo Finance

• The Fed Has A Perfect Interest Rate in Mind CNN

• Senators Unveil Bipartisan Funding Deal to Avert Government Shutdown Wall Street Journal

• US Government Shutdown Bad for Country’s Credit, Warns Moody’s Reuters

• The Resilient Part of the Housing Market is Slowing Yahoo Finance

• More Workers Returning to NYC Office Buildings Than Previously Reported NY Post

• Why Rising Long-Term Rates Could Ripple Across the Economy Axios

• US Crude Oil Hits Highs of the Year Wall Street Journal

• Americans’ Feelings About the Economy Are Getting Worse Axios

• The First Tour Inside Manhattan’s Newest Private Club, with $100k Membership Fees CNBC

• Taylor Swift Mania Upstages NFL Sunday Wall Street Journal

The Deep Insight

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